maverick
19-12-2007, 07:03 AM
Another New Era
Ken Fisher
What does "new era" mean to you? There was a New Era Philanthropy that turned out to be a scam. There was a New Era in Technology at the turn of the century that said that the internet was worth an infinite amount of money. That turned out to be flimflam. An then, sometime near the market's double bottom in October 2002 and March 2003, the bears came up with their own New Era: We are entering a New Era of below-average returns. Bunk, just like the other two eras.
Since the epoch of supposedly subpar returns got under way, the global stock market has been enjoying markedly above-average returns. This has been true over the past five years taken together (when the Morgan Stanley World Index has averaged an 18.3 per cent annual return) and also in every calendar year except 2005, when the return was shy of its historical (post -1926) performance by a whisker.
What gives? At first post-2002 bulls were dismissed by academics and Wall Street sourpusses as not with it. Well, those who utterred the bearish New Era babble were the ones who weren't with it and should be relegated to the Siberia of commentators. But note that five years of above-average returns haven't yet generated any groundswell of thinking that we're now in some New Era of above-average returns.
That's bullish! It means sentiment hasn't turned euphoric, as it did in the late 1990's. Thus, there's room for more of a bull market ahead. I want to be the first to say we definitely are in a New-Era of above-average returns. I'll keep buying stocks until we hear multiple pundits say we are entering a new period of high returns. That will be a time to sell.
When will this happen, that consensus will turn almost uniformly bullish? I don't know, but I doubt it will be before 2009 starts. Hence, I'm expecting another above-average year ahead, an easy one.
Here are a few factors I don't fear as we enter 2008, either because they won't happen or don't matter; further collapses in the mortgage market; a credit crunch; Hillary as President (or whomever we elect-more on that next month); $ 125 oil; inflation; rising long term rates; folly from the Federal Reserve (though I expect folly there); Iranian Idiocy (a pleonasm); or anything you read in BusinessWeek.
What do I worry about? I told you last month. My biggest fear is of a rising yen and for the reason I detailed. To wit: The US and European markets are being propped up by speculators who borrow in yen.
But otherwise, buy stocks and be happy. It's still easy-five years into this bull market-to find above average companies selling at below average valuations. And this is when valuations are in general low compared with the cost of long term capital.
Ken Fisher
What does "new era" mean to you? There was a New Era Philanthropy that turned out to be a scam. There was a New Era in Technology at the turn of the century that said that the internet was worth an infinite amount of money. That turned out to be flimflam. An then, sometime near the market's double bottom in October 2002 and March 2003, the bears came up with their own New Era: We are entering a New Era of below-average returns. Bunk, just like the other two eras.
Since the epoch of supposedly subpar returns got under way, the global stock market has been enjoying markedly above-average returns. This has been true over the past five years taken together (when the Morgan Stanley World Index has averaged an 18.3 per cent annual return) and also in every calendar year except 2005, when the return was shy of its historical (post -1926) performance by a whisker.
What gives? At first post-2002 bulls were dismissed by academics and Wall Street sourpusses as not with it. Well, those who utterred the bearish New Era babble were the ones who weren't with it and should be relegated to the Siberia of commentators. But note that five years of above-average returns haven't yet generated any groundswell of thinking that we're now in some New Era of above-average returns.
That's bullish! It means sentiment hasn't turned euphoric, as it did in the late 1990's. Thus, there's room for more of a bull market ahead. I want to be the first to say we definitely are in a New-Era of above-average returns. I'll keep buying stocks until we hear multiple pundits say we are entering a new period of high returns. That will be a time to sell.
When will this happen, that consensus will turn almost uniformly bullish? I don't know, but I doubt it will be before 2009 starts. Hence, I'm expecting another above-average year ahead, an easy one.
Here are a few factors I don't fear as we enter 2008, either because they won't happen or don't matter; further collapses in the mortgage market; a credit crunch; Hillary as President (or whomever we elect-more on that next month); $ 125 oil; inflation; rising long term rates; folly from the Federal Reserve (though I expect folly there); Iranian Idiocy (a pleonasm); or anything you read in BusinessWeek.
What do I worry about? I told you last month. My biggest fear is of a rising yen and for the reason I detailed. To wit: The US and European markets are being propped up by speculators who borrow in yen.
But otherwise, buy stocks and be happy. It's still easy-five years into this bull market-to find above average companies selling at below average valuations. And this is when valuations are in general low compared with the cost of long term capital.